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Creditor Insurance in Argentina

  • January 2016
  • -
  • Finaccord
  • -
  • 27 pages

Finaccord’s report titled Creditor Insurance in Argentina offers uniquely detailed insights into the market for creditor insurance, sometimes also referred to as payment protection insurance or loan-related insurance, as acquired by individual borrowers in Argentina. Drawing on the results of a survey of 70 lenders, the study analyses the distribution of creditor insurance by banks and other lending institutions, how provision rates vary for different lending products, operating models used for arranging creditor insurance, and distribution partnerships weighted by the size of distributors. The PartnerBASE™ dataset that accompanies the report details all creditor insurance distribution deals traced by Finaccord. In short, this study will provide you with the definitive guide to current and future opportunities in creditor insurance in Argentina.

Key features of this study plus the PartnerBASE™ dataset and market data annexe that accompany it include:

- quantification of creditor insurance market size and growth with a timeline from 2011 to 2015 and onwards to 2019: how much is this market worth in Argentina and what is its future development potential?

- segmentation of this market both by underlying loan type (differentiating between mortgages, point-of-sale automotive finance, other consumer finance and credit card loans) and by type of cover (differentiating between cover for death / permanent disability and temporary incapacity / unemployment);

- consideration of operating models used for creditor insurance: how advanced is the use of captive and joint venture underwriters by lending institutions in Argentina and what are the opportunities for external underwriters?

- calculation of weighted provider share of partnerships: Finaccord’s unique quantitative analysis helps to identify which underwriters of creditor insurance hold the relationships that offer the most potential;

- investigation into alternative distribution channels for selling creditor insurance: a number of factors could increase the potential for entities other than the lending institutions themselves to sell creditor insurance in Argentina.

Table Of Contents

Creditor Insurance in Argentina
TABLE OF CONTENTS
00 EXECUTIVE SUMMARY 1
10 INTRODUCTION 3
What is this report about? 3
This report provides a comprehensive analysis of loan-related insurance policies in Argentina 3
Rationale 3
The report tracks over 120 separate initiatives for marketing creditor insurance through lending institutions 3
Methodology 3
Survey of banks and other lending institutions 3
Market data 4
Definitions 5
Creditor insurance 5
Mortgages, consumer finance and credit cards 5
Weighted provider share of partnerships 5
Operating models 6
Abbreviations and exchange rates 7
PartnerBASE and market data annexe 7
Finaccord 7
20 MARKET ANALYSIS 9
Banks and other lending institutions covered 9
Introduction to the banking sector 9
In terms of its number of retail customers, Banco de la Nación leads the market… 9
… and state-owned banks generally account for a substantial share of the Argentine banking sector… 10
… albeit it remains quite fragmented when all types of institution are considered 10
Consumer lending market size and growth 10
Mortgage lending 10
Mortgage balances outstanding declined sharply in real terms between 2011 and 2015 10
… and inflation is a key factor holding back developed of mortgage lending 10
Non-mortgage lending 12
In real terms, the non-mortgage retail lending sector has posted very moderate growth 12
Credit and other pay later cards 13
Around 369 million credit and pay later cards have been issued in Argentina 13
Creditor insurance provision rates, operating models and partnerships 15
Creditor insurance linked to mortgages 15
Most mortgage lenders offer related creditor insurance 15
… and many by means of captive underwriters… 15
albeit ten non-captive underwriters and one joint venture are also active in this field 15
Creditor insurance linked to consumer finance 17
Over 60 institutions granting non-mortgage loans promote associated creditor insurance… 17
… with MetLife ranked first by weighted share of partnerships… 17
… ahead of captive or lender-owned underwriters such as Galicia Seguros and BNP Paribas Cardif 17
Other non-captive competitors include ACE, Assurant, CNP Assurances, MAPFRE and Sancor 17
Creditor insurance linked to credit cards 20
Likewise, a very clear majority of credit card issuers have an arrangement for related creditor insurance… 20
… with many partnerships replicating those for other types of loan-related cover… 20
… in a field in which there are also around 20 non-captive underwriters competing for mandates 20
13 credit card issuers have no apparent arrangement for payment protection insurance 21
Creditor insurance risk coverage 23
Cover for temporary incapacity and unemployment is available with a small minority of policies… 23
… although there is only a marginal difference between the weighted and unweighted analyses 24
Alternative distribution channels 25
Creditor insurance is available from other sources but rarely, if ever, as a stand-alone product 25
Creditor insurance market size, growth and forecast 25
The bulk of the market value is composed of policies related to consumer finance and credit cards 25
Once inflation has been accounted for, the market actually declined in value between 2011 and 2015 26

LIST OF GRAPHICS / TABLES

00 EXECUTIVE SUMMARY 1
Creditor insurance gross written premiums in Argentina, segmented by policy and cover type, 2011, 2015 and 2019 (forecast) (table) 2
10 INTRODUCTION 3
Banks and other lending institutions in Argentina contacted by Finaccord, segmented by type 4
20 MARKET ANALYSIS 9
Residential mortgage lending balances outstanding in Argentina (absolute and per capita), 2011 to 2015 11
Consumer non-mortgage lending balances outstanding in Argentina (absolute and per capita), 2011 to 2015 12
Credit and other pay later cards issued and per capita in Argentina, 2011 to 2015 13
Key data points for the consumer lending market in Argentina, 2011 to 2015 (table) 14
Provision of creditor insurance linked to mortgages in Argentina, 2015: provision rate, operating models and weighted provider share of partnerships 16
Provision of creditor insurance linked to consumer finance in Argentina, 2015: provision rate, operating models and weighted provider share of partnerships 19
Provision of creditor insurance linked to credit cards in Argentina, 2015: provision rate, operating models and weighted provider share of partnerships 22
Unweighted risk coverage of creditor insurance policies in Argentina, segmented by type of underlying product, 2015 23
Weighted risk coverage of creditor insurance policies in Argentina, segmented by type of underlying product, 2015 24
Creditor insurance gross written premiums in Argentina, segmented by policy type, 2011, 2015 and 2019 (forecast) 26
Creditor insurance gross written premiums in Argentina, segmented by cover type, 2011, 2015 and 2019 (forecast) 27
Creditor insurance gross written premiums in Argentina, segmented by policy and cover type, 2011 and 2015 (table) 27
Creditor insurance gross written premiums in Argentina, segmented by policy and cover type, 2019 (table) (forecast) 27

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